Exhibit 3(a)
AGREEMENT
Effective September 12, 2001 The Lincoln National Life Insurance Company, member
NASD, (hereinafter "Lincoln National") appoints:
Xxxxx Fargo Investments, LLC
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Name of Representative or Entity
of (or incorporated under the laws of) California
--------------------------------
City, State or State
as a broker/Dealer (hereinafter "Representative).
1. Definitions
a. Broker: An individual appropriately licensed and appointed to sell
the fixed insurance products or variable insurance products described
herein.
b. Registered Representatives: An individual who, as a result of passing
the appropriate examinations of the National Association of Securities
Dealers (NASD) or other appropriate self-regulatory organizations
(SRO), and also appropriately licensed and appointed to sell insurance
products may sell the insurance products described herein.
c. Corporate Insurance Broker: A corporation appropriately licensed to
sell the fixed insurance products of non-registered variable products
described herein.
d. Broker/Dealer: An individual, partnership, corporation or other legal
entity admitted to membership in the National Association of
Securities Dealers (NASD) and appropriately licensed and/or appointed
to sell the insurance products described herein.
2. Limitations on Appointment
The Representative is authorized to solicit applications for those
contracts named in the Compensation Schedules attached to this Agreement
only while properly licensed by and/or registered with the appropriate
governmental agency or authority for that specific type of product. All
fees for such licensing shall be borne by the Representative along with any
administrative charges associated with such licensing. In no event is the
Representative authorized to offer Lincoln National contracts in the state
of New York.
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3. NASD Membership (if applicable)
Each party to this Agreement, if acting as a Broker/Dealer, represents that
it is a member of the National Association of Securities Dealers, Inc.
("NASD"). Each party further agrees to comply with all applicable state and
federal law, rules, and regulations. Broker/Dealer's expulsion from the
NASD shall automatically terminate this Agreement without notice.
Broker/Dealer's suspension will terminate this Agreement immediately upon
written or oral notice from Lincoln National received by Broker/Dealer.
4. Limitations of Authority
The Representative has no authority to incur any obligations or debts for
or on behalf of Lincoln National without its express written consent; to
make, modify, or discharge any contract on behalf of Lincoln National by
any statement, promise, representation or transaction; to waive, alter,
modify or change any of the terms, rates, or conditions of the Lincoln
National contracts.
5. Relationship of Parties
In the performance of all its duties under this Agreement, the relationship
of the Representative to Lincoln National is that of an independent
contractor and none other. Neither party shall be deemed to be an employee
or partner of the other party for any purpose, and nothing herein shall be
construed to create the relationship of master and servant, employer and
employee, or joint venturers between the Representative and Lincoln
National.
6. Compensation
Upon submission of applications for Lincoln National contracts by the
Representative, or appropriately licensed agents of the Representative,
conforming to such rules and procedures for the conduct of the business of
Lincoln National as are now established and as may be reasonably
established by Lincoln National in the future, and upon issuance of
contracts by Lincoln National, the Representative shall be entitled,
subject to the terms and conditions of the Agreement, to the applicable
service fees set forth in the attached Compensation Schedule(s) or
revisions of such Compensation Schedule(s) and all amendments, changes, and
replacement thereof, as may be made at the exclusive discretion of Lincoln
National. These Compensation Schedule(s) are made a part of this Agreement.
Revised Compensation Schedules shall apply to policies issued and service
fees earned after the date that said schedules are adopted by Lincoln
National. In the case of any of any violation of any of the terms of this
Agreement, Lincoln National shall be allowed to retain service fees earned
but not yet paid by Lincoln National. Lincoln National has the right to
deduct damages and expenses from such retained service fees. If
Representative sells in an unauthorized market, or without pre-approval of
Lincoln National where
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necessary, such Representative forfeits all compensation under this
Agreement from such unauthorized sale.
The Representative shall be solely responsible for all compensation paid to
its agents and all related tax reporting that may be required under
applicable law.
7. Exclusive Rights of Solicitation and Service
a. Where the Representative establishes a relationship with an
organization such as a hospital, church, school, college or similar
institution for the purpose of selling Lincoln National contracts, no
other entity with authorization by Lincoln National may approach,
solicit, or otherwise contact such an organization for the purpose of
selling or servicing Lincoln National contracts as long as the
Representative is actively and effectively selling and servicing
Lincoln National contracts.
b. Notwithstanding anything to the contrary contained (a) above, the
parties expressly agree that the Representative may represent any
other insurance carriers and offer any other insurance, lines,
products, or business, whether or not such other carrier lines,
products or business compete directly or indirectly with Lincoln
National.
x. Xxxxxxx National shall be the sole arbitrator in these matters, and
further, reserves the right to withdraw the exclusive rights of any
entity, at the complete discretion of Lincoln National.
d. With the exception of routine communications to contractholders
regarding operational matters, quarterly, semi-annual or annual
statements or legally required disclosure documents, Lincoln National
agrees not to forward any additional sales materials regarding the
contracts described herein without Agent's prior written consent. Such
written consent includes a facsimile transmission or an e-mail.
x. Xxxxxxx National will not use the data acquired as a result of this
Agreement to solicit contractholders for any other products or
services offered by Lincoln National. However, if contractholder(s)
become known to Lincoln National through means other than this
Agreement, any such resulting sale by Lincoln National will not
constitute a violation of this section 7d.
8. Advertising and Marketing Material
a. The Representative shall cooperate with Lincoln National in preparing
advertising, solicitation brochures, and other marketing materials to
be used by Representative to sell Lincoln National contracts. No
promotional and marketing material shall be used by Representative to
sell Lincoln
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National contracts unless such material has received the prior written
approval of Lincoln National. No promotional and marketing material
shall be disseminated or used in any manner unless Lincoln National's
express written approval has been given hereto.
b. The Representative agrees to indemnify and hold Lincoln National
harmless from any liability resulting from the negligent, improper,
unauthorized, or illegal use of sales, marketing, solicitation, or
other materials.
c. Upon termination of this Agreement, all records, unused supplies,
Lincoln National provided software, and all other material furnished
by Lincoln National in the Representative's possession shall be
returned to Lincoln National upon request or destroyed.
9. Prospectus (If applicable)
a. Lincoln National agrees to deliver to the Representative current
Lincoln National prospectuses. The Representative agrees to destroy
and dispose of all prior prospectuses immediately upon receipt of the
current prospectuses.
x. Xxxxxxx National shall be liable for all statements contained in the
current prospectus. The Representative shall be liable for all
statements made by the Representative, his/her/its agents, or
employees, if applicable, which are not contained in the current
prospectus.
10. Deposits
Any deposits received by the Representative on behalf of Lincoln National
shall be forwarded promptly, but under no circumstances in more than two
(2) business days, in gross amount to Lincoln National.
11. Indemnification
a. The Representative shall be responsible to Lincoln National for the
malicious, intentional, reckless, knowing, or negligent acts or
omissions of its employees, officers, agents, and sales persons for
the business covered under this Agreement and shall indemnify and hold
harmless Lincoln National from any claims, demands, actions,
judgments, loss, cost or expense, including court costs, punitive
damages and reasonable attorney fees incurred by Lincoln National by
reason of such acts or omissions.
x. Xxxxxxx National shall be responsible to the Representative for the
negligent acts or omissions of its employees, officers, agents, and
sales persons for the business covered under this Agreement and shall
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indemnify and hold harmless the Representative from any claims,
demands, actions, judgments, loss, cost, or expense including court
costs and reasonable attorney fees incurred by the Representative
which are caused by or arise out of any negligent acts or omissions of
Lincoln National, its employees, officers, agents, or sales persons.
c. The Representative, not Lincoln National, is solely responsible for
all statements, written or oral, acts, or representations, whether
expressed or implied, made by his/her/its agents, or employees and is
responsible for notifying his/her/its agents or employees of the terms
and conditions of this Agreement.
d. The Representative, not Lincoln National, is solely responsible as to
the suitability of sale of the Lincoln National contracts to
individual persons.
e. The Representative shall immediately notify Lincoln National of any
and all complaints about Lincoln National contracts received by the
Representative.
12. Assignments/Modifications
a. Lincoln National and the Representative shall make no assignment or
transfer of this Agreement or of any benefits or obligations
hereunder, either in whole or in part without prior written consent of
the other. Any such assignee or transferee shall be properly licensed,
including pursuant to Section 1 of this Agreement, to perform its
function under this Agreement prior to the assignment to transfer. All
terms and conditions of this Agreement are applicable to any
assignment or transfer.
b. This Agreement may only be modified by written consent of both
parties. This Agreement embodies the entire Agreement of the parties
relative to the matters with which it deals and is intended to be the
entire and exclusive embodiment thereof. Neither the Representative
nor Lincoln National shall be bound by any promise, agreement,
understanding, or representation heretofore or hereafter made relative
to the subject matter of this Agreement except a change, revision, or
addition to the attached Compensation Schedule(s) as provided in
Section 6, unless the same is made in writing and signed by an officer
of the Representative and Lincoln National which expresses by its
terms an intention to modify this Agreement.
13. Indebtedness or Representative
Lincoln National shall have first lien on all service fees and other
compensation payable hereunder for any debt due from the Representative to
Lincoln National or any of its affiliates, including charges relating to
certain cancellations,
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rejections, or reissues of contracts. Lincoln National may at this time
deduct or set off from any moneys payable under this Agreement, or from any
other source, any such debt or debts at the legal rate. This lien shall not
be extinguished by the termination of the Representative's authority. This
provision shall not be construed in any way to limit any indebtedness of
the Representative to the value of the service fees and other compensation
payable under this Agreement. In the event of the termination of the
Representative's authority, the unpaid balance of the Representative's
indebtedness shall be immediately due and payable without demand or notice.
14. Termination of Agreement
The Representative or Lincoln National may terminate the Representative's
appointment under this Agreement, with or without cause, by notice sent by
ordinary mail to the last known address of the other party. Terminations of
appointment as used in this Agreement shall mean termination of authority
either through cancellation of the appropriate license or registration as
required by this paragraph or through termination of this entire Agreement.
However, Lincoln National reserves the right, rather than to completely
terminate this Agreement, to suspend the right of the representative to
sell new business, including taking applications on existing contracts, but
still allow the representative to service existing business. This right
shall exist provided that it does not violate any applicable state or
federal law or regulation. Lincoln National will provide evidence of
servicing relationship in writing to Representative. Lincoln National
reserves the right to terminate the service agreement pursuant to the terms
of this Agreement.
If the Representative's right to sell new business, including taking
applications on existing contracts, is suspended by Lincoln National while
still allowing representative to service existing business, then all
compensations as provided by this agreement shall continue to be payable to
representative as long as representative remains Broker/Dealer of record
and unless otherwise provided in this agreement.
15. Customer Confidentiality
The parties hereto understand and acknowledge that they may come into
possession of certain information, including "nonpublic personal
information" as described in the Xxxxx-Xxxxx-Xxxxxx Act ("GLB") about
persons who are current contractholders of Lincoln Life or who may become
contractholders of Lincoln Life through the operation of this Agreement. As
such information ("Customer Information") may be utilized by the parties to
perform services on behalf of Lincoln Life for the benefit of such
contractholders, the parties agree to the following:
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a. To comply with all applicable laws, rules, regulations and ordinances
relating to privacy, confidentiality, security, data security and the
handling of consumer and/or customer information which may be
established from time to time.
b. To use Customer Information only as necessary to perform services
required by this Agreement and not to disclose or otherwise make
available to any other party.
c. To require their representative officers, directors, partners,
employees, agents and representatives to maintain the confidentiality
of the Customer Information.
d. To take all reasonable precautions to safeguard and protect the
Customer Information and agree to monitor their use of Customer
Information to ensure compliance with this Agreement.
However, nothing in this Agreement shall prevent the parties from
selling or offering to sell other investment products or services to
the contractholders described herein, provided such contractholder is
made known to any party through means other than this Agreement.
In all other respects, the Agreement among the parties remains the
same.
16. Forbearance
Forbearance or neglect of Lincoln National to insist upon performance of
this Agreement shall not constitute a waiver of its rights and privileges.
17. Choice of Law
The Representative and Lincoln National expressly agree that in the case of
any disputes arising under this Agreement, said Agreement shall be
construed under Indiana Law.
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LINCOLN NATIONAL REPRESENTATIVE
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxx Fargo Investments
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Assistant Secretary Corporate Insurance Broker
Or Broker/Dealer
By: /s/ not legible
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(Authorized Officer)
911374280
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Tax Identification Number
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COMPENSATION SCHEDULE
XXXXX FARGO NEW DIRECTIONS CORE
Trail Compensation
Age of Owner on Cash Years
Date of Deposit Flow 2-7 (1) 8+ (2)
--------------- ---- ------- ------
*** 75 5.05% .30% .80%
**** 76 3.05% .30% .80%
(1) Annual trail compensation rate. Trail compensation is paid quarterly
(.075%/qtr). It is paid on the quarter ending account value following
the contract is 15/th/ month less any deposits made in the prior 15
months.
(2) Annual trail compensation rate. Trail compensation is paid quarterly
(.20%/qtr). It is paid on the quarter ending account value following
the contract's 84/th/ month less any deposits made in the prior 84
months.
Annuitization
Upon annuitization of a Xxxxx Fargo New Directions Variable Annuity to
which no surrender charge applies:
A continuing commission of .80% annually will be paid on a quarterly basis.
It will be applied to the statutory reserves held by Lincoln National at
the end of each calendar quarter on contracts annuitized on a variable
basis and which remain annuitized on a variable basis (i.e. excluding any
statutory reserves associated with post-annuitization transfers from a
variable payout to a fixed payout).
A one-time 3% commission will be paid on the contract value initially
annuitized on a fixed basis. This compensation will not apply to
post-annuitizations transfers from a variable payout to a fixed payout.
Income 4 Life
New Issues
If a contract owner elects an Income4Life (I4L) payout at issue or within
twelve (12) months from the time the Xxxxx Fargo New Directions Core
Variable Annuity is issued, the I4L compensation will be:
*** denotes less than or equal to
**** denotes greater than or equal to
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I4L Compensation I4L Cash Flow I4L Annual
Schedule Compensation Compensation (1)
-------- ------------ ----------------
Deposits 1.00%
Deposits **** 15 months old 1.00%
(1) The I4L annual compensation will be paid at the end of each calendar
quarter at the rate of .25% beginning in the calendar quarter 15
months after the date of deposit. It will be paid on the quarter
ending account value less any deposits made within the prior 15
months.
If compensation was initially paid under a different option before the I4L
payout election was made, the compensation will be reversed and repaid on
the basis of the I4L schedule.
If the I4L annuitization option is discontinued, future compensation will
be based on the I4L, compensation schedule.
In-Force Contracts
For contracts that have been in force for at least twelve (12) months when
the I4L annuitization option is elected, the compensation paid on I4L will
be the same as for the Xxxxx Fargo New Directions Core Variable Annuity
except that the trail compensation payable beginning in year 8 will be
increased from .80% to 1.00%.
If the I4L annuitization option is discontinued, future compensation will
be based on the original deferred annuity compensation schedule.
The I4L compensation schedule only applied to I4L and is payable in lieu of
any other compensation.
COMPENSATION SCHEDULE
XXXXX FARGO NEW DIRECTIONS ACCESS
Trail Compensation
Age of Owner on Cash Years
Date of Deposit Flow 2+ (1)
--------------- ---- ------
*** 90 1.00% 1.00%
*** denotes less than or equal to
**** denotes greater than or equal to
10
(1) Annual trail compensation rate. Trail compensation is paid quarterly
(.25%qtr.). It is paid on the quarter ending account value following
the contract's 15/th/ month less any deposits made in the prior 15
months.
100% of the cash flow compensation paid on deposits will be charged back
during the first six months from the date of deposit upon: full surrender,
withdrawals in excess of 10% of deposits, or annuitization.
50% of the cash flow compensation paid on deposits will be charged back
during months seven through twelve from the date of deposit upon: full
surrender, withdrawals in excess of 10% of deposits, or annuitization.
Deposits are assumed to be taken out on a first in, first out basis for
applying the charge back rules.
Annuitization
Upon annuitization of a Xxxxx Fargo New Directions Access Variable Annuity:
A continuing commission of 1.00% annually will be paid on a quarterly
basis. It will be applied to the statutory reserves held by Lincoln
National at the end of each calendar quarter on contracts annuitized on a
variable basis and which remain annuitized on a variable basis (i.e.
excluding any statutory reserves associated with post-annuitization
transfers from a variable payout to a fixed payout).
A one-time 3% commission will be paid on the contract value initially
annuitized on a fixed basis. This commission will not apply to
post-annuitizations transfers from a variable payout to a fixed payout.
Income 4 Life
New Issues
If a contract owner elects an Income4Life (I4L) payout at issue or within
twelve (12) months from the time the Xxxxx Fargo New Directions Access
Variable Annuity is issued, the I4L compensation will be the same as for
the deferred annuity.
In-Force Contracts
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For Xxxxx Fargo New Directions Access Variable Annuity contracts that have
been in force for at least twelve (12) months when the I4L annuitization
option is elected, the I4L compensation will be the same as for the
deferred annuity.
The I4L compensation schedule only applied to I4L and is payable in lieu of
any other compensation.
COMPENSATION SCHEDULE
XXXXX FARGO NEW DIRECTIONS ACCESS 4
Trail Compensation
Age of Owner on Cash Years
Date of Deposit Flow 2-4 (1) 5+ (2)
--------------- ---- ------- ------
Option 1
*** 75 4.75% .00% 1.05%
**** 76 3.75% .00% 1.05%
Option 2
*** 75 2.25% 1.05% 1.05%
(1) Annual trail compensation rate. Trail compensation is paid quarterly.
It is paid on the quarter ending account value following the
contract's 15/th/ month less any deposits made in the prior 15
months.
(2) Annual trail compensation rate. Trail compensation is paid quarterly
(.2625%/qtr.). It is paid on the quarter ending account value
following the contract's 48/th/ month less any deposits made in the
prior 48 months.
Annuitization
Upon annuitization of a Xxxxx Fargo New Directions Access 4 Variable
Annuity to which no surrender charge applies:
A continuing commission of 1.05% annually will be paid on a quarterly
basis. It will be applied to the statutory reserves held by Lincoln
National at the end of each calendar quarter on contracts annuitized on a
variable basis and which remain annuitized on a variable basis (i.e.
excluding any statutory reserves associated with post-annuitization
transfers from a variable payout to a fixed payout).
*** denotes less than or equal to
**** denotes greater than or equal to
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A one-time 3% commission will be paid on the contract value initially
annuitized on a fixed basis. This compensation will not apply to
post-annuitizations transfers from a variable payout to a fixed payout.
Income 4 Life
New Issues
If a contract owner elects an Income4Life (I4L) payout at issue or within
twelve (12) months from the time the Xxxxx Fargo New Directions Core
Variable Annuity is issued, the I4L compensation will be:
I4L Cash Flow I4L Annual
I4L Compensation Schedule Compensation Compensation (1)
------------------------- ------------ ----------------
Deposits 1.05%
Deposits **** 15 months old 1.05%
(1) The I4L annual compensation will be paid at the end of each calendar
quarter at the rate of .2625% beginning in the calendar quarter 15
months after the date of deposit. It will be paid on the quarter
ending account value less any deposits made within the prior 15
months.
If compensation was initially paid under a different option before the I4L
payout election was made, the compensation will be reversed and repaid on
the basis of the I4L schedule.
If the I4L annuitization option is discontinued, future compensation will
be based on the I4L compensation schedule.
In-Force Contracts
For contracts that have been in force for at least twelve (12) months when
the I4L annuitization option is elected, the compensation paid on the I4L
will be on the basis of the original compensation option chosen for the
Xxxxx Fargo New Directions Access 4 Variable Annuity.
The I4L compensation schedule only applied to I4L and is payable in lieu of
any other compensation.
**** denotes greater than or equal to
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COMPENSATION AND SERVICING SCHEDULE
Xxxxx Fargo Investments LLC ("Representative"), a broker-dealer and member of
the NASD, agrees to perform the following services on behalf of Lincoln National
Life Insurance Company ("Lincoln National") in exchange for the compensation
payments described below:
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SERVICES COMPENSATION
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1. General wholesaling support for new sales 10% of new deposits
through the Xxxxx Fargo Private Client Service
System.
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1. Actively promote the Xxxxx Fargo New
Directions variable annuity product series for
new sales through the Lincoln Financial Advisors
("LFA") distribution system. .36 % of new deposits
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2. Develop pre-sale materials and presentation
for use by the LFA distribution system.
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No compensation will be paid by Lincoln National to Representative on deposits
to any Xxxxx Fargo New Directions variable annuity that originated from any
other life or annuity contract issued or administered by Lincoln National or any
of its affiliated companies. However, compensation will be paid on deposits that
originate from the Flex7Plus fixed annuity product issued and administered by
First Penn-Pacific Life Insurance Company, an affiliate of Lincoln National.
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